Looking Into the Details of the Economic Situation in the West Bank

Each year, the World Bank publishes a report (World Bank, Economic Monitoring Report of the Ad-Hoc Liaison Committee, Sept. 22, 2008) at the behest of the United Nations on the fiscal and economic status of the West Bank and Gaza. The conclusions are similar every year; Israel is to blame for the deteriorating situation. Israeli restrictions and Jewish settlements are deemed the main obstacles to economic recovery and growth. Media coverage of the report dutifully disseminates the message that Palestinian suffering is Israel’s fault. This year was no exception.

In “West Bank hit hard by Israeli restrictions”  Agence France Presse ( October 23, 2008 ) discussed the report’s findings:

The West Bank’s economy is suffering from precarious lack of investment, largely because of Israeli restrictions on movement and despite increased international aid…

The AFP article continued,

The World Bank painted a gloomy picture of the situation in the Israeli-occupied territory, which it said was “fragmented into a multitude of enclaves, with a regime of movement restrictions between them.”

 The main culprit was Jewish settlement:

The more than 100 settlements that dot the territory are considered illegal under international law and are viewed as a major obstacle to the peace process.

The report also pointed to increasing settler violence in the territory, including the destruction of trees, homes, and infrastructure, which it said had created a “permanent state of insecurity” that deterred investment.

An earlier AFP review ( September 17, 2008)  of the report noted:

Burdened by Israeli restrictions that paralyse the economy of the occupied West Bank and the Gaza Strip, Palestinians have become more and more reliant on outside assistance, the World Bank said on Wednesday.

On a similar vein, an Associated Press summary of the World Bank report stated

The Palestinians are becoming more dependent on foreign aid, mainly due to a sluggish economy stifled by continued Israeli restrictions on trade and movement… ( September 17, 2008 )
According to the International Herald Tribune ( October 6, 2008) the present situation could best be improved by “…reducing the roadblocks in the West Bank that are strangling the Palestinian economy.”
This is a standard formulation, as evidenced by its nearly verbatim repetition in an editorial on a topic unrelated to the World Bank report appearing in the New York Times on Nov. 5, 2008. The editorial stated, “As a step toward peace, Israel must freeze all settlements and reduce the roadblocks in the West Bank that are strangling the Palestinian economy.”  
Israel is frequently accused of imposing a complete blockade of Gaza while maintaining a stranglehold over the West Bank economy.   Yet neither Gaza nor the West Bank is entirely surrounded by Israel; each territory shares a border with an Arab neighbor. Israeli measures that isolate Gaza and impede commerce in the West Bank rely upon tacit agreement with its Arab neighbors. Egypt administers the Rafah crossing between Gaza, while the Allenby crossing provides the West Bank with a contiguous link to Jordan.

In marked contrast to these reports, a report released by Israel’s Ministry of Defense, “Positive Trends in Economic Indicators for the West Bank (November 2008),” provided a more upbeat assessment, highlighting economic progress in the West Bank. The Israeli report notes that vehicle imports are up 953 percent from 2007 and wages have increased by 24 percent. Unemployment is down to 16 percent and tax collections are up 50 percent. Much of the reason for this improvement is because trade with Israel is up 35 percent.

This last statistic is worthy of more attention and  leads back to the World Bank Report , the details of which confirm much of what the Israeli document asserts. Although the report summary and recommendations change little from year to year, a more complex picture emerges from the details. The report calculates “90 percent of West Bank and Gazan foreign trade is with Israel.(p. 41) ” This statistic is remarkable considering the enormous disparity between Israel’s population – 7 million – and the region’s Arab states – over 250 million. Despit e the hostility existing between Israel and the Palestinians, Israelis, on a per capita basis, do over 300 times more business with the residents of the West Bank and Gaza than do the citizens of the region’s Arab states.  

It is argued in the report that Israeli restrictions make it difficult for the West Bank and Gaza to trade with the outside world. While Israeli checkpoints and other security measures  do impose burdens on the transporting of goods, particularly those that are perishable or time-sensitive, the World Bank report reveals the Palestinian exporters favor shipping their goods through Israel despite the impediments.

To access the world market Palestinians can send their goods through Israel or Jordan.

Israel currently provides the most economical and best services, so despite the security constraints, the majority of shippers send their goods through Israel. (P. 44)

The report then adds “Israel has recently extended the hours of operation at Allenby (the link between the West Bank and Jordan), but note that the crossing is underutilized due to insufficient demand.” (P. 44) 

A more balanced assessment of the economic circumstances prevailing in the West Bank and Gaza should explain that while Israeli security measures negatively impact the Palestinian economy, it is  Israel, and not the surrounding Arab states, that offers a path for Palestinian commerce and economic growth.  


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